The labor market has taken significant steps in the quest to return to pre-recession employment levels, but concerns remain about the quality of jobs being created. Wages have increased over the past year, but are lagging behind the predicted growth rate. The Wells Fargo Economics Group released a report asserting that slow growth in earnings is a ripple effect of the financial crisis. The report speculates that employers who did not lay off employees or make wage cuts in the recession are now restraining wage growth to compensate for their decisions.
There are signs of hope for employees, according to the report. Slack in the labor market has decreased significantly over the past year, and unemployment has dropped to 6.1 percent. Quality employees are also becoming scarce in the marketplace. Wells Fargo predicts that wages will grow gradually over the next year, but feels it is unlikely that the Fed will be compelled to raise interest rates until sometime in the middle of 2015.
In a positive sign for the housing market, RealtyTrac reports a nationwide decrease in homes that were quote--seriously underwater, down to 9.1 million homes in the second quarter of 2014. The classification is given to homes where the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value. The report shows a 0.2 percentage point decrease from first quarter. Negative equity in distressed properties is also down, from 45 to 44 percent, and the share of foreclosures with positive equity similarly decreased by 1 percent.